Introduction
If you have any experience in building a software product, you know the pressure to save money where you can while not affecting the final product. This isn’t unique to software. In a rush to have a more competitive price, textile companies, auto parts companies, and pharmaceutical companies have all looked at offshoring as a viable option for them. Granted, they have all saved millions of dollars by moving some of their operations offshore. After decades of outsourcing to other countries, recently there been a correction and many companies are coming home. But Nearshoring is a solution that has the benefits of the being close to your development team, while still having cost savings over hiring developers in the U.S. or on your staff. Let’s have a look at some of the ways Nearshoring helps save money.
Cost of Hiring Developers
The primary place where companies can save money by outsourcing is by hiring developers in countries where the developers’ hourly rate is lower. For example, software developers’ hourly rates can be up to 50% less depending on the country and the position you are hiring. Developers in South America are on average paid 30% of the same position in the U.S. You can read more about how Developer’s Hourly Rates compare in our latest Infographic. So, if you can navigate through the company hiring process, there can be significant savings. While the savings are clear, they often translate to “getting more for your money”. Instead of just hiring a developer, you might be able to include a designer, or QA to the team to make a more complete team. So while you can directly save money by hiring a Nearshoring development team, you can also indirectly save money by having access to a larger group of experts.
Better Communication Saves Money
While this isn’t as direct as the wages example above, it is just as real. Any delays on the project will translate to money that is wasted. It isn’t too difficult to imagine that every time your project is delayed a day or two or ten, you are losing money. You are paying developers that can’t complete their work until the previous steps are completed. The more efficient your scheduling, the more you can save money. Nearshoring helps with this by making communication more efficient. Having the developers in a close time zone means that you shouldn’t have to wait a day or two to hear back from a question you have, or to have a quick phone call. Communication also helps to build trust within both teams. When you are able to answer and respond to questions quickly, your team and partners learn that they can depend on you.
Quicker Development Times
With everything else taken care of, if you can beat your competitors to market, you will have an advantage and a quicker ROI. You can position yourself in the market ahead of the other companies in your industry. It stands to reason then, that quicker development time will result in saved money. But you don’t only save money, you are quicker to start earning money. You can leave the development stage and then move onto the marketing and promotion stage.
Hiring Part-Time vs. Full-Time Staff
By using a Nearshoring staff augmentation business model you can take advantage of a strategy that uses part-time developers rather than one that only implements in-house software teams. If you don’t need to have developers on your full-time permanent staff, you can hire a small team of specialists to work on your projects just when you need them. You can have full-time managers and directors on staff, and they can work together with an outsourced development team. A good team to work with will be like an extension of your existing team, and you don’t have to keep them long-term if you don’t need them. While this may take more coordination between the two teams, it can produce a high-quality software product at a more economical price.
Quality that Won’t Affect your Final Product and Image
A final indirect area you can save money is by having a high-quality product. This might not be obvious at first, but if your software development is high quality, you won’t have to worry about going back to make changes or spend as much time on support and maintenance. While quality may cost a little more than cutting corners on development, in the long run, quality will always win. But when you are Nearshoring your project, you can usually afford to have a larger team for your development and end up with a high-quality product.
Conclusion
Software development is changing. The typical software development process used to be to have all your developers in-house. If you needed a specialist, you hired them to your staff. You had to develop your own QA team. Your support group was their own department. But with the changes in technology and management styles, it is becoming more acceptable to hire out work to teams that are managed short term. With the cost savings and the development of Nearshoring teams, you will see many more companies going to a Nearshoring software development model.
